Doesnt this imply that the UST will want to maximize common share prices if they are going to have public offerings. Hard to see why they would want to force a receivership or act in a way that would bring more lawsuits and more uncertainty. The best thing the FHFA can do is capitalize the GSE's as fast as they can under the circumstances and acting in a way that would screw common shareholders would be a bad way to have new investors trust the FHFA and UST going forward.
We should look to independent Board Members and Special Committees to hire work with Advisors that can issue a fairness opinion on any restructuring. Ultimately shareholders will have to vote on a restrucuring. Perhaps they keep the common and junior preferred in place and just exercise the warrants for a stock sale but more likely would seem a restructuring which would have to be approved by shareholders. A forgone conclusion if warrants are exercised but a process nevertheless. FNMA and FMCC definitely have value and really are priced like options on a lot of potential outcomes. Could be one of the best long term investments ever at these prices since they have high certainty of long term dividends if properly capitalized. The are backed by the best assets in the world which is homeowner equity in the greatest country in the world. THis seems like great news for the patient investor.
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